September 3, 2015    3 minute read

Just Eat: Soon Beat?

   September 3, 2015    3 minute read

Just Eat: Soon Beat?

There can be much to take away from Just Eat’s success on the London Stock Exchange. The Danish startup, still riding high from their exploits in Australia after their acquisition of Menulog was registered at a record £445 million straddling the competition down under. Now Uber and companies such as Amazon are entering the fray with an extension to their Amazon Prime service spelling trouble for the UK powerhouse.

Just Eat enjoyed a great 6 months of the year as there was a 59% rise to 11m users with orders increasing by 52% to 41.9m, over 70% of which derived from the UK alone. As a result the post-year revenues should post figures of around £230m, £30m higher than forecast. The rapid speed of growth sent the stock souring well over 60% after the one year mark of its debut, this April. However news of imminent competition has seen the stock fall 20% in the time since then.

Amazon’s delivery service has been trialing in Seattle (their home town) with minor alterations to the Just Eat business model. Instead of delivering the food, Amazon simply connects users of their application and website to local restaurants where they are able to pay using their Amazon account. This move, seemingly the next logical step for Amazon since the launch of their groceries delivery service AmazonFresh in late 2013, which is already running in 3 states and is soon to debut in the UK. Uber on the other hand has started to roll out UberEats where the taxis are contacted by restaurants to deliver the meals to customers. The service is running in  7 US states and as well in Barcelona and has received praise for its ability to live up to the claim that it will deliver your lunch within 10 minutes.

The USA is a key market which Uber and most definitely Amazon would be able to thrive in as there is no states equivalent of Just Eat currently operating with nationwide reach. David Buttress, chief executive, is still not too concerned at the immediate threat that these companies inflict,  who said;

“We have a tonne of runway left to shoot for” 

This is in reference to the fact that 70% of all orders taken in the UK are done by telephone, an option which is not available on the competitors’ counterparts. Nick Batram, analyst at Peel Hunt, warned otherwise. 

“Ultimately, as the big boys move in and competition from alternative models increases, there is potentially a risk to margins in the long-term.”

Just Eat Plc seems to be concentrating elsewhere for now, with progress in non-core territories, namely France and Mexico with revenues increasing by 113% to £24.1m in the first six months. Buttress added that there is “nothing at all in the pipeline” for immediate expansion.

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